Strong US dollar trims Wall Street optimism 💵 Hawkish Fed Barkin comments

Wall Street started the session with gains, with the tech Nasdaq 100 leading the gains, which will be heavily dependent on Nvidia's financial results in the coming days (NVDA.US, release tomorrow after the US session). Quickly, however, comments by Thomas Barkin, head of the Richmond Fed, supported the dollar and put pressure on risky assets.

• Barkin communicated clearly - if US inflation remains high and demand does not send signals today indicating a sizable cooling, it will require a tightening of Fed policy.
• High consumer spending and economic strength allow the US economy to accelerate before inflation cools.
• The banker indicated that he would not prejudge a decision at the next Fed meeting in September. In Barkin's view, the recent big moves in bond yields are not a sign of 'toxic' monetary tightening, but are a response to incoming, good economic data
• The U.S. dollar is having a great session today, with USDIDX dollar index contracts posting gains. At the same time, the US100 erases a good part of the increases from the beginning of the session.

A technical look at the USDIDX and US100

The SMA50 and SMA100 averages formed a 'golden cross' formation confirming the upward momentum - the USDIDX quickly stopped the sell-off and is trading around 103.5 where we see previous price reactions (local peaks).

Source: xStation5

There is a similar situation on the US100 (Nasdaq100) - however, the bulls have not been able to stay above 15,000 points or above the SMA200 (15,040 points), which indicates still strong bears. Support has turned into resistance and now the bulls will again fight to regain the psychological level of 15,000 points.

Source: xStation5